3/1/2010 - The Case For High-Deductible Health Plans

The Case For High-Deductible Health Plans

After last week's health care summit it became clear that the President has a total disdain for high-deductible insurance plans. Why would anyone choose to use their health isurance for catastrophic purposes instead of everyday problems? Obama made it clear he didn't understand. He assumes people will be willing to pay 10 to 13% more for more coverage. What he doesn't get is that there are people out there that would prefer to have less coverage for less money. Many Americans choose to purchase high-deductible plans and supplement those with Health Savings Accounts or simply pay everyday costs out of pocket. Michael Tanner from Cato does an excellent job of explaining why:

The RAND Health Insurance Experiment, the largest study ever done of consumer health purchasing behavior, provides ample evidence that consumers can make informed cost-value decisions about their health care. Under the experiment, insurance deductibles were varied from zero to $1,000. Those with no out-of-pocket costs consumed substantially more health care than those who had to share in the cost of care. Yet, with a few exceptions, the effect on outcomes was minimal.And, in the real world, we have seen far smaller increases in the cost of those services, like Lasik eye surgery or dental care, that are not generally covered by insurance, than for those procedures that are insured.In fact, a study by Amy Finklestein of MIT suggests that nearly half of the per capita increasing health care spending is due to increased health insurance coverage.No one is suggesting that people shouldn't have insurance. But insurance is ultimately meant to spread the risk of catastrophic events, not to simply prepay your health care. Your homeowners insurance covers you if your house burns down. It doesn't pay to mow your lawn or paint the fence. Read more.

I hope Republicans will take heed of this information and continue to focus on ways to give Americans more choice in their health care not less.

 

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